We are living in an era of interconnectedness and countries’ economies are linked with each other. Economically, whatever happens in any particular country reverberates across the world. Like Chinese economy is facing troubles because of coronavirus.
Coronavirus is a new respiratory virus; however, it came from the same viral family as SARS which also began in China. This new virus thought to have originated from the Wuhan seafood market. An outbreak of virus has killed thousands of people and infected many more in China and less than hundred across the world. The virus has not only affected the lives but also affected national and international trade.
The outbreak of coronavirus opened debt around the world. Rumors and conspiracy theories spread about the rising of coronavirus. Western people claim that genetic engineering laboratory of Wuhan is the reason of outbreak. Some in Russia assume the coronavirus is the USA biological weapon built by CIA to hit the Chinese economy. Nevertheless any assumptions haven’t been proved yet. But the virus hit hard China as well as global trade.
In the beginning China only lock down only Wuhan but when the virus spread over other regions they declared emergency on other important sites and the restrictions over travel also imposed. These measures have disrupted many of China’s industries, tourism and aviation. For instance, the number of airlines including United and British Airways suspended China’s flight.
The Chinese stock market plunged 8% as coronavirus fear took hold, the investors lost their billions of dollars investment and if we talk about the neighbouring countries specially Pakistan the stock markets index slashed by it 1137 points and other countries like Japan, Singapore and South Korea they all also have felt some sort of fluctuations in the prices.
China is the world’s second-largest economy and largest exporter. Its decline in production can create enormous impacts on international trade. It plays an important role in the global value chain: most of the raw materials of the world travel to China before being transformed into a manufactured product.
The oil price has fallen in global market because China the world’s biggest importer of oil is grapple with Coronavirus which led to the reduction in the demand of oil and also limited the economic trade movement.
Due to coronavirus, many companies have stopped their production in China and abroad because workers are confined at home which causes trouble for companies, such as Foxconn, Apple’s manufacturing partner in China is facing production delay. Nissan and Hyundai carmakers couldn’t get parts and temporarily closed factories outside China.
An assessment of 1,000 small and medium-sized enterprises (SMEs) supervised by two Chinese universities found that unless conditions improved, one-third of the firms would run out of cash within a month.
In order to fully interpret the probable impacts on international trade, we have to look at one of the most recent cases it would be the 2003 SARS outbreak. Like SARS, the Chinese economy has lost 2% in real GDP growth in 2003 and it cost the global economy about $40 billion. It didn’t affect that much international trade.
In comparison with 2003, China’s foreign trade is five times bigger today, and its shares from the global economy have also expanded. It would not be astonishing if developments in China impact the global trade severely than it would 17 years ago.
According to economists, if the coronavirus isn’t curbed soon the world’s GDP would drop $1.1tn. It will ultimately continue to loom on particularly Chinese trade and generally international trade.
*The writer is student of International Relations, University of Sindh, and having specialization in East & Southeast Asian Studies. She can be reached on [email protected]